Victor Kümmritz, 05 March 2015

Global value chains (GVCs) clearly promote trade and investment but their impact on domestic value-added is less clear. This column discusses new evidence showing that GVCs participation stimulates domestic value, but not for all nations. It is necessary for low- and middle-income countries to increase their absorptive capacities if they are to reap benefits from GVC participation.

Kristian Behrens, Théophile Bougna, Mark Brown, 05 March 2015

Transport costs fell precipitously during the last century leading many observers to posit that the world has ‘become flat’. If this were true, the costs of transporting goods should no longer have much bearing on firms’ location choices and the spatial structure of economic activity. This column, using manufacturing data for Canada from 1990 to 2008, argues that despite a decline in geographical concentration of industries, location patterns still change with fluctuations in transport costs.

Piotr Danisewicz, Dennis Reinhardt, Rhiannon Sowerbutts, 05 March 2015

In a global financial system, macroprudential policies may create international spillovers. This column presents new evidence on how the organisational structure of a bank affects the magnitude of these spillovers. An increase in capital requirements at home causes foreign branches to reduce their lending growth to other banks operating in the UK more than foreign subsidiaries do. Seemingly, this is because branches are an integral part of the parent company.

Sebastian Edwards, 04 March 2015

There were 24 sovereign defaults and debt restructurings between 1997 and 2013. Using data on 180 debt restructurings – for both sovereign bonds and sovereign syndicated bank loans – this column argues that the roughly 75% ‘haircut’ Argentina imposed on its creditors in 2005 was an outlier. Greece’s ‘haircut’ of roughly 64% in 2012, by contrast, was in line with previous experience.

Brian Bell, Anna Bindler, Stephen Machin, 04 March 2015

Recessions can lead to an increase in youth unemployment, which could later negatively affect labour market outcomes. This column explores the effect of recessions on criminal activity. The findings indicate a substantial effect on initiating and forming youth careers. There is initially strong and eventually long-lasting detrimental effect of entering the labour market during a recession for individuals at the threshold of criminal activity. These effects are economically substantial and potentially more disturbing than short-run effects.

Other Recent Columns:

Events